German Chancellor Angela Merkel was in Kyiv on November 1 set to meet with Ukrainian President Petro Poroshenko one day after Russia imposed tit-for-tat sanctions on Ukraine and ratcheted up tensions between the two countries.

In what is Merkel’s second visit in four years to Kyiv, top of the agenda is the military conflict in the eastern regions of Donbas. Merkel was in Istanbul last week for a summit with Turkish President Recep Tayyip Erdogan, French President Emmanuel Macron and Russian president Vladimir Putin to discuss ways of bringing the conflict in Syria to an end, but she also had a bilateral face to face with Putin that covered Ukraine, among other matters. Merkel has met with Putin several times this year already and is working hard to solve the Ukraine dilemma. Her efforts have become especially poignant following her announcement this week that she will stand down when her current term in office finishes.

An immediate issue is the planned elections for the leadership of the self-declared Donetsk and Luhansk People’s Republics set for November 11. The scheduled polls have been condemned by the international community which takes the position that until the peace process is completed such elections cannot be free, fair or representative.

Merkel’s standpoint is that the only way to end the stand-off in Donbas is through the Minsk II accords that she signed following a meeting with Putin and Poroshenko in September 2014. However, the process is frozen and most of the deadlines in the agreement have been missed.

Stalling
For his part Putin is stalling. With key presidential and parliamentary elections due in Ukraine in 2019, it seems that Putin is betting on a change of government in Kyiv and waiting to see if the incoming president will turn out to be more amenable to a revised deal. Current opposition leader, former prime minister and head of the Batkivshchyna (Fatherland) party, Yulia Tymoshenko, is ahead in the opinion polls. Poroshenko is seen as trailing her by around seven points and he will struggle to make it to a second-round runoff vote unless his fortunes change. However, the polls in Ukraine vary widely and there is little clarity on what will actually happen on election day.

In the meantime, tensions between Ukraine and Russia have escalated. In sharp focus right now is the Sea of Azov, where Russia recently completed the Kerch bridge that links Russia’s mainland with the annexed Crimean peninsula. Russia has effectively been running a naval blockade of the straits, cutting off some Ukrainian shipping from ports on Ukraine’s side of the Black Sea. Russia illegally detained 93 Ukrainian ships for inspections between April and July in the Kerch Strait and it continues to stop and inspect ships in those waters. A recent study found that the bridge will hurt Ukraine’s international trade.

Sore point
Another sore point is Germany’s backing of the Russian plan to expand its direct links between the Yamal gas fields and Germany, via the Nord Stream 2 gas pipeline extension. Ukraine may find itself cut out of the Russian gas delivery loop from Russia to its European clients if the pipeline goes ahead. It could forego a badly needed $3bn a year in transit fees.

Germany, for its part, has backed the pipeline, which will improve its own energy security, partly by cutting out Ukraine which is prone to “gas wars” with Russia, as well as by lowering the cost of gas imports.

The whole topic of Nord Stream 2 has become very emotive, but the economics of the pipeline are clear. As bne IntelliNews has previously reported, the share of Russian gas in the European mix has fallen from over 80% in the 1990s to about 35% now, but Europe’s demand for gas continues to rise so the volumes of gas Russia delivers have also risen over the same period.

“Both Poroshenko’s meeting with Merkel, and his possible meeting with Putin, won’t produce any significant developments or breakthroughs. That’s largely because elections will almost certainly be held in occupied Donbas on November 11, something which has angered Western leaders because they are in violation of the Minsk Accords. That will postpone any significant peace talks until 2020, or after the October 2019 parliamentary vote. That also means that Putin will use the fighting in Donbas to influence the 2019 elections in Ukraine,” Zenon Zawada of Concorde Capital said in a note.